India invites foreign firms to join 100-GW solar mission

Sep 13, 2016: The Indian government has taken a smart move by inviting foreign companies to join India’s major solar project—a 100-GW solar project—to be implemented by 2022.

In such a promising solar scenario, a number of Chinese companies are looking to enter the Indian solar market. Some major Chinese players such as Trina Solar, Longi Silicon, JA Solar and Hanwha Solar are showing interest in setting up manufacturing capacities in India. Trina Solar has 20% share in India’s solar panels’ market.

India’s smart solar move

Since India’s local solar manufacturing capacity is not as developed as that of China, it is still not cost-competitive as China’s. Hence, the Indian government’s move to open the new solar projects to foreign companies is seen by the industry as a smart move.

The Indian government is also making attempts to encourage foreign players such as Trina Solar, Canadian Solar, Hanwha Solar and First Solar to consider joint ventures to build module manufacturing in India, with suitable concessions and incentives.

India has also been luring manufacturers by providing various incentives under the state and even the central levelschemes. The Modified Special Incentive Package Scheme (M-SIPs) policy of the central government is designed to provide financial incentive of up to 25% of the capital cost of module manufacturing facilities.

In addition, different states have also come up with incentives like power and water subsidies, exemption of stamp duty, VAT/CST tax exemption etc. India’s Domestic Content Requirement (DCR) and Make In India are the key driving forces behind western companies expanding in India.

Advantages of foreign investment

India’s solar strategy to welcome foreign companies to join its 100-GW solar mission will help to reduce costs and bring advanced technology. Trina Solar has already installed 8 GW solar panels in India and its major Indian clients are Renew Power, Wellspun, ACME and Hero Future Energies.Trina has recently signed a MoU with the Andhra Pradesh government for acquiring 90 acres of land in order to start a solar production plant in the state.

In the absence of strong local manufacturing, India will need to import $42 billion of solar equipment by 2030, corresponding to 100 GW of installed capacity, according to a report by global accounting firm KPMG.

Some underlying issues

Lack of manufacturing scale in the Indian solar sector still remains high. Even though India wants local content, 90% of the nation’s panels are imported. Indian manufacturers have to depend on accessories from China. By manufacturing in India, foreign companies likeTrina can help to develop India’s market by bringing in the supply chain from China.

India’s national solar program, which was launched in 2010 calls for measures to protect and support local industry. Its domestic content requirement clause makes it mandatory for solar producers to source a certain percentage of solar cells from local manufacturers. India is looking to become the world’s fourth-largest solar market with a target to add 5.5 GW of solar capacity in 2016.